Tenant is offering more rent to increase number of approved occupants. Legal?

Hi everyone,

I have some great tenants who have rented IP2 (TAS) for the last few months, they are an older couple in an average size 3 bed 1 bath on 700sqm. The lease states that there is only two approved occupants. I spoke to them yesterday and they want to know if it is okay for their extended family (two adults + toddler) to move into the two empty bedrooms whilst the family build their own home nearby (to save on rent which would be an absolute minimum of $300pw in the area).

The tenants said they are happy to pay an inflated rental rate for the period the family is living in the property (the tenants idea). There would need to be a new lease (subject to references and credit checks) with all adults listed. Then when the family move out my original tenants would go back to the original rent (currently $315pw).

The kitchen and bathroom are original 1985 condition. I updated the place with new floorings, curtains and fresh paint... So I am thinking wear and tear is not a deal breaker... Obviously my preference would be to not allow them to move in, but if I did allow them to move it it would need to be pretty decent remuneration to make it worth while. I don't want to rock the boat. The original tenants have strongly indicated that they wish to be long term tenants (also shown in their rental history).

QUESTION: How much should I look at raising the rent by? Is this legal or would the tribunal have something to say about the ethics? The tenants union website was no help but I am hoping they will respond to my enquiry shortly (from the tenants POV of course).

 

Can raise rent by mutual agreement. No reason needs to be indicated.

I'd want to name them on the lease though. All names are joint and severally liable for the property. You can remove them from lease again afterwards.

 

Overall the tenants probably could have moved them in without telling you and without paying you anything extra - without you being able to do much about it.

So maybe keep that in mind and not ask for too much extra rent.

You're in safe territory as long as it is genuinely the tenants who have raised the issue - probably not a good idea to risk this changing with a 'greedy' increase (from their point of view).

 

I'd ask them first what they thought was reasonable to pay? If you ask too much the young family might just rent a cheap 1 or 2bd flat for the duration of the build (and just suck-up being cramped) and store excess stuff at your IP2.

I'd have no problem with this proposed arrangement, but I'd be mindful of toddlers + new flooring + new carpets. If it were me I'd accept whatever they thought reasonable to pay if you want to keep them as LT tenants, but I'd ask for a higher bond. Some food/glue/paint stains just don't come out of carpets and curtains.

 

As others have mentioned, put the new names on the new agreed lease. Ask them how much they think is reasonable for the extra use and pretty much agree to it. They could of had the family move in anyways and not told you.

If you go greedy they might become bad tenants or not move in.

Be nice if they come back and say $100 p.w extra

 

Thank you @D.T. @thatbum @Phase2 and @Big Will

I have followed your advice and asked the tenant (paraphrasing) what they are willing to pay for the period. I am so glad that I did.

I just got a reply OMG... Looks like @Big Will gets bragging rights

 

I would not ask, nor accept extra rent in this situation.

 

I'll PM you my bank details you can transfer the first 2 week increase (PM charge this as a standard rate for leases) .

 

Bloody PM fees @Big Will

l now I hope the extended family take forever to build their home.

 

You can pretty much go out for a really nice dinner now each week!

 

Ni

Great result! Nice one @legallyblonde

 

About $65 a week in my pocket after taxes Nom Nom Nom!

 

Plus you can write down your increased cashflow figure when you apply for your next loan....

 

Well done.

A win/win/win. A win for the existing tenants, a win for the additional tenants and a win for you.

Hearing these types of stories make me so happy.

 

What? Someone not whinging now that the property is neutrally/positively geared????

 

Could be negatively geared, lets talk about that haha

 

With 105% lvr it was sitting around neutral with 5.9% yield. This takes it up to 7.7% yield. Looks like next years tax debt will put this years 5k owed to shame! .

 

See a good accountant.... are you claiming all your deductions? Depreciation is a huge one.

The only time I had to pay tax while owning IPs was when I sold one and made a profit. Even then I was surprised by how little CGT had to be paid.

 

I just thought I'd clarify in case anybody has the wrong impression... I'm definitely still paying taxes but I was always getting a fair lot of the withheld tax amount paid back to me while owning rental properties.

So anyway, a second part to this story, later on (after a few years) I ended up submitting a PAYG variation through my employer so i'm currently not paying the tax upfront. More money in my pocket for my own use each week....

 

If you didn't ask and they offered, would you still not accept it?